Archive for the ‘Economic Development’ category

More California Companies Hearing ‘Move to Our State’ Pitches

October 18, 2016

This proves that for every action there is a reaction: New measures by Gov. Jerry Brown and the California legislature that have worsened our business environment have boosted efforts by other states to recruit California companies to their friendlier locations.

Each visiting out-of-state representative outlines how a California company will benefit by relocating to one of their communities. Economic Development agencies also promote the advantages to California firms of placing future expansions in their areas.

california-precip-map-not-copyrightedAlthough no official records exist regarding recruitment activity in California by economic development organizations, I’ve experienced several hundred touchpoints from parties in far-flung locations wishing to discuss the state’s business environment.

California industries being targeted include financial services, manufacturing, robotics, software, e-commerce, food processing, aerospace, pharma and biotech, plastics, electronics, distribution and even family-owned dairy farms.

In the past, officials from a couple of agencies would contact me every month, but now it’s often two or three times per week.

The states with the highest California-related activity are Texas with 62 agencies, Indiana following at 22 and Arizona at 18. I define activity as visits, phone calls or direct-mail campaigns.

But the true level of activity is greater. For example, organizations in Texas, Nevada and Florida – and economic development agencies in Phoenix, Indianapolis and Pittsburgh – make multiple overtures in California.

The representatives are able to project significant operating cost reductions when it comes to labor, workers’ compensation, unemployment insurance, health care, taxes, facility leases or purchases, regulatory compliance and transportation. Affordable housing in other parts of the country also make it easier for companies to attract and retain employees.

Officials in other states follow activity in Sacramento where Gov. Brown enacted about 800 new laws this year, some of which will result in more regulations and higher tax and energy costs for California companies.

They also are struck by the unfairness of California’s new one-size-fits-all minimum wage law, which forces companies in low-cost areas to pay big-city wages as if they were located in the West Coast’s most expensive cities – Los Angeles and San Francisco. The legislature and Gov. Brown put businesses that face competition from foreign companies at quite a disadvantage.

Without a change in California’s political climate, I expect more inquiries to come in from states seeking to grow their economic base.

The identities of the 247 economic development entities that represent touchpoints with Spectrum Location Solutions are as listed below:

Alabama:

  1. Alabama Power, Mobile
  2. Baldwin County Economic Development Alliance, Robertsdale
  3. North Alabama Industrial Development Association, Decatur
  4. Power South Energy Cooperative, Montgomery

Arizona:

  1. Access Arizona, Casa Grande
  2. Apache Junction Economic Development Dept.
  3. Arizona Commerce Authority, Phoenix
  4. Arizona Public Service (utility), Phoenix
  5. Arizona Sun Corridor, Phoenix
  6. Avondale Economic Development Dept.
  7. Central Arizona Regional Economic Development Foundation, Casa Grande
  8. Gilbert Office of Economic Development
  9. Glendale Office of Economic Development
  10. Greater Phoenix Economic Council
  11. Mesa Economic Development Dept.
  12. Queen Creek Mayor
  13. Salt River Project (utility), Phoenix
  14. Scottsdale Economic Development Dept.
  15. Surprise, AZ City Manager
  16. Tempe Economic Development Dept.
  17. Wickenburg Regional Economic Development Partnership
  18. Yuma Economic Development Dept.

Arkansas:

  1. Office of the Governor

Colorado:

  1. Centennial Economic Development
  2. Colorado Springs Regional Economic Development Corp.
  3. Commerce City Economic Development Dept.
  4. Erie Economic Development Dept.
  5. Longmont Economic Development Partnership
  6. Metro Denver Economic Development Corp.
  7. Office of the Governor
  8. Westminster Economic Development Office

Florida:

  1. Brooksville-Tampa Bay Regional Airport
  2. Enterprise Florida, Orlando
  3. Florida East Coast Railway, Jacksonville
  4. Gulf Power, Pensacola
  5. Hernando County Economic Development Dept., Brooksville
  6. Jacksonville Port Authority
  7. Lake Wells Chamber of Commerce & Economic Development Council
  8. Manatee County Port Authority, Palmetto
  9. Office of the Governor
  10. Orange County Economic Development
  11. Orlando Economic Development Commission
  12. Power South Energy Cooperative, Miramar Beach
  13. Santa Rosa County Economic Development, Milton
  14. Sarasota County Economic Development Corp., Sarasota
  15. Petersburg Area Economic Development Corp.
  16. Tampa Bay Partnership, Tampa
  17. Tampa Hillsborough Economic Development Corp., Tampa

Georgia:

  1. Atlanta Economic Development Corp.
  2. Atlanta Economic Development Dept.
  3. Fayette County Development Authority, Fayetteville
  4. Georgia Dept. of Economic Development, Atlanta
  5. Rabun County Economic Development Authority, Rabun Gap

Idaho:

  1. Coeur d’Alene Area Economic Development Corp.
  2. Grow Idaho Falls Inc.

Iowa:

  1. Iowa Economic Development Authority, Des Moines
  2. Office of the Governor

Indiana:

  1. Bloomington Economic Development Corp.
  2. Carmel Community Relations and Economic Development
  3. Delaware County Economic Development Alliance, Muncie
  4. Duke Energy Economic Development, Indianapolis
  5. Duke Energy Economic Development, Plainfield
  6. East Central Indiana Regional Partnership, Muncie
  7. Fishers Economic Development Dept.
  8. Grant County Economic Growth Council, Marion
  9. Harrison County Economic Development Corp., Corydon
  10. Hoosier Energy Economic Development Dept., Bloomington
  11. Indiana Economic Development Corp., Indianapolis
  12. Indiana Municipal Power Agency, Carmel
  13. Indianapolis Chamber of Commerce
  14. Indy Partnership, Indianapolis
  15. Jackson County Industrial Development Corp., Seymour
  16. Madison County Corp. for Economic Development, Anderson
  17. Noblesville Economic Development Dept.
  18. Northeast Indiana Regional Partnership, Fort Wayne
  19. Office of the Governor
  20. Shelby County Development Corp., Shelbyville
  21. Vectren Economic Development (utility), Evansville
  22. Whitley County Economic Development Corp., Columbia City

Kansas:

  1. Black Hills Energy, Wichita
  2. Go Topeka Economic Partnership

Kentucky:

  1. Bowling Green Area Chamber of Commerce
  2. Hopkins County Economic Development Corp., Madisonville
  3. Kyndle Economic Development for Northwest Kentucky, Henderson
  4. South Western Kentucky Economic Development Council, Hopkinsville

Louisiana:

  1. Baton Rouge Area Chamber
  2. Cleco Power, Crowley
  3. Entergy (utility), New Orleans
  4. Livingston Economic Development Council
  5. Louisiana Economic Development, Baton Rouge
  6. North Louisiana Economic Partnership, Shreveport
  7. Southwestern Electric Power Co., Shreveport

Missouri:

  1. Kansas City Area Development Council
  2. Kirksville Regional Economic Development Inc.
  3. Lincoln County Economic Development, Troy
  4. Missouri Partnership, St. Louis
  5. Moberly Area Economic Development Corp.
  6. Nodaway County Economic Development, Maryville
  7. Northeast Missouri Economic Development Council, Hannibal
  8. Springfield Area Chamber of Commerce
  9. Louis Regional Chamber

Michigan:

  1. Lansing Economic Area Partnership

Mississippi:

  1. Jackson County Economic Development Foundation, Inc. Pascagoula
  2. Mississippi Power, Meridian

North Carolina:

  1. Advantage West Economic Development Group, Fletcher
  2. Beaufort County Economic Development, Washington
  3. Charlotte Regional Partnership
  4. Davidson County Economic Development Commission, Lexington
  5. Duke Energy, Charlotte
  6. Greensboro Partnership Economic Development

New Mexico:

  1. Albuquerque Economic Development
  2. Mesilla Valley Economic Development Alliance, Las Cruces
  3. NM Partnership, Albuquerque

Nevada:

  1. Economic Development Authority of Western Nevada, Reno
  2. Henderson Economic Development Dept.
  3. Las Vegas Global Economic Alliance
  4. Nevada Office of Economic Development, Carson City
  5. Northern Nevada Development Authority, Carson City
  6. NV Energy, Reno

Ohio:

  1. Cuyahoga County Dept. of Development, Cleveland
  2. Greater Akron Chamber
  3. Greater Cleveland Partnership
  4. Jobs Ohio, Toledo
  5. Piqua Economic Development Dept.
  6. Team Northeast Ohio, Cleveland
  7. Tipp City Community and Economic Development Dept.
  8. Youngstown-Warren Regional Chamber

Oklahoma:

  1. Greater Oklahoma City Chamber
  2. Norman Economic Development Dept.

Oregon:

  1. Business Oregon, Eugene
  2. Confederated Tribes of the Umatilla Indian Res., Economic Dept., Pendleton
  3. Greater Portland Inc.
  4. Hillsboro Economic Development
  5. Klamath County Economic Development, Klamath Falls
  6. McMinnville Economic Development Partnership
  7. Port of Portland
  8. Southern Oregon Regional Economic Development, Inc. Medford

Pennsylvania:

  1. Altoona-Blair County Development Corp.
  2. Armstrong County Dept. of Economic Development, Kittanning
  3. Governor’s Action Team
  4. Greater Pittsburgh Chamber of Commerce
  5. Greater Reading Economic Partnership
  6. Penn-Northwest Development Corp., Mercer
  7. Pittsburgh Regional Alliance

South Carolina:

  1. Central South Carolina Economic Development, Columbia
  2. Myrtle Beach Regional Economic Development, Conway
  3. Oconee County Economic Development Commission, Walhalla
  4. Richland County Economic Development, Columbia
  5. Santee Cooper (utility), Moncks Corner
  6. Spartanburg County Economic Futures Group

South Dakota:

  1. Governor’s Office of Economic Development

Tennessee:

  1. East Tennessee Economic Development Agency, Knoxville
  2. HTL Advantage (Haywood, Tipton, Lauderdale), ED Coalition, Covington
  3. Knoxville Chamber
  4. Montgomery County Economic Development Council, Clarksville
  5. Nashville Area Chamber of Commerce
  6. Tennessee Economic & Community Development, Nashville
  7. Tennessee Valley Authority, Nashville
  8. Williamson County Economic Development, Franklin

Texas:

  1. Allen Economic Development
  2. Amarillo Economic Development Corp.
  3. Arlington Economic Development Dept.
  4. Athens Economic Development Corp.
  5. Austin Chamber, Economic Development Dept.
  6. Bastrop Economic Development Corp.
  7. Bay Area Houston Economic Partnership
  8. Bowie Economic Development Corp.
  9. Brownsville Economic Development Council
  10. Buda Economic Development Corp.
  11. Burleson Economic Development
  12. Burlington Northern Santa Fe Railway, Economic Development Dept., Fort Worth
  13. Cedar Park Economic Development
  14. CenterPoint Energy, Houston
  15. Copperas Cove Economic Development Corp.
  16. Dallas Regional Chamber
  17. Denton Economic Development
  18. DeSoto Economic Development Corp.
  19. Flower Mound Economic Development Dept.
  20. Fort Worth Chamber, Economic Development Division
  21. Frisco Economic Development Corp.
  22. Georgetown Economic Development
  23. Greater Houston Partnership
  24. Greater Irving-Las Colinas Chamber of Commerce
  25. Greater Waco Chamber Business Development
  26. Harlingen Economic Development Corp.
  27. Houston Port Region Economic Alliance
  28. Hutto Economic Development
  29. Katy Economic Development Council
  30. Kilgore Economic Development Corp.
  31. Kyle Economic Development
  32. Laredo Development Foundation
  33. Levelland Economic Development Corp.
  34. Lockhart Economic Development
  35. Longview Economic Development Corp.
  36. Lubbock Economic Development Alliance
  37. Matagorda County Economic Development Corp., Bay City
  38. McKinney Economic Development Corp.
  39. Midland Development Corp.
  40. Mount Pleasant Economic Development Corp.
  41. Nacogdoches Economic Development Corp.
  42. New Braunfels Economic Development
  43. Office of the Governor
  44. Oncor (utility), Dallas
  45. Pearland Economic Development Corp.
  46. Plano Economic Development
  47. Port of Houston Authority
  48. Richardson Economic Development Partnership
  49. Rio South Texas Economic Council, Edinburg
  50. Rockwall Economic Development Corp.
  51. Round Rock Chamber Economic Development Partnership
  52. Rowlett Economic Development
  53. San Antonio Economic Development Foundation
  54. San Marcos Partnership Economic Development
  55. Seguin Economic Development
  56. Southern Texas Economic Development Foundation, Beaumont
  57. Sugar Land Economic Development
  58. Team Texas, Austin
  59. Texas Economic Development & Tourism Dept., Austin
  60. Texas Secretary of State
  61. Victoria Economic Development Corp.
  62. Wichita Falls Economic Development

Utah:

  1. Cache County Chamber, Economic Development, Logan
  2. Economic Development Corp. of Utah, Salt Lake City
  3. Office of Economic Development, Salt Lake City
  4. Office of the Governor
  5. Ogden Community and Economic Development Dept.
  6. Weber County Economic Development Partnership, Ogden

Virginia:

  1. Fairfax County Economic Development Authority, Tysons Corner
  2. Hampton Economic Development
  3. Hampton Roads Economic Development Alliance, Norfolk
  4. Isle of Wright County Economic Development, Isle of Wright
  5. Office of the Governor
  6. Portsmouth Economic Development Dept.
  7. Roanoke Regional Partnership
  8. Rockingham County Dept. of Community Development, Harrisonburg
  9. Virginia Beach Economic Development
  10. Virginia Economic Development Partnership, Richmond
  11. Virginia Port Authority, Norfolk
  12. Virginia’s 2000 Business and Economic Development Alliance, Lynchburg
  13. Virginia’s Growth Alliance, Keysville
  14. Washington County Economic Development & Community Relations, Abingdon

Washington:

  1. Greater Spokane Inc.
  2. Port of Sunnyside
  3. Yakima County Development Association

West Virginia:

  1. Jefferson County Development Authority, Charles Town
  2. West Virginia Development Office, Charleston

A state-by-state tally is below:

Rank

State

Number of Organizations
1 Texas 62
2 Indiana 22
3 Arizona 18
4 Florida 17
5 Virginia 14
6 Missouri 9
6 Tennessee 9
8 Colorado 8
8 Ohio 8
8 Oregon 8
11 Louisiana 7
11 Pennsylvania 7
13 North Carolina 6
13 Nevada 6
13 South Carolina 6
13 Utah 6
17 Georgia 5
18 Alabama 4
18 Kentucky 4
20 New Mexico 3
20 Washington 3
22 Idaho 2
22 Iowa 2
22 Kansas 2
22 Mississippi 2
22 Oklahoma 2
22 West Virginia 2
28 Arkansas 1
28 Michigan 1
28 South Dakota 1
Total

247

One focus of this blog has been to address California’s difficult business environment, as addressed in the study, California Business Departures: An Eight-Year Review 2008-2015, (PDF) updated Jan. 14, 2016.

Joseph Vranich is known as The Business Relocation Coach while the formal name of his business is Spectrum Location Solutions. Joe helps companies find great locations in which to grow. Also, Joe has been a Keynote Speaker for more than 20 years – see A Speaker Throughout the U.S. and in Europe and Asia.

Another Los Angeles-Area Tech Company Creates Jobs . . . 800 Miles Away & Out of State

June 20, 2016

PCM, an El Segundo-based IT services provider, will open a sales center in Rio Rancho, New Mexico this summer, with the first of more than 200 employees coming on board in August.

El Segundo to Rio RanchoGov. Susana Martinez and other state officials, on a recent trade mission to California, asked the company’s CEO to consider New Mexico.

PCM provides technology support to clients that include the NFL’s Cincinnati Bengals and Green Bay Packers, Sea World, Wendy’s, GE, and others. Salaries of the sales positions will range between $45,000 and $65,000.

Frank Khulusi, CEO and founder of PCM, said, “Meeting with Gov. Martinez and her team in California was a game changer. Learning about New Mexico’s improved business environment and talented workforce was a deciding factor in expanding our operations to this state.”

The publicly traded company will generate $2.2 billion in sales this year.

See the complete story at the Albuquerque Journal, “Calif. tech company brings more than 200 jobs to Rio Rancho.”

 *  *  *

One focus of this blog has been to address California’s difficult business environment, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, (PDF) updated Jan. 14, 2016.

Joseph Vranich is known as The Business Relocation Coach while the formal name of his business is Spectrum Location Solutions. Joe helps companies find great locations in which to grow.

Another California Company to Expand Big Time – in Texas

December 23, 2015

Breaking news from the Austin American Statesman:

Oracle Corp. will build a huge, new corporate campus on 27 acres in Austin. With the new campus, Oracle plans to grow its Austin workforce by 50 percent over the next few years. The move expands the presence of another rapidly growing California-based technology giant in Central Texas, as companies including Apple Inc., Google and Facebook are aggressively ramping up their workforces there.

Seal_of_Austin,_TXIn addition to its new 560,000-sq. ft. campus, the deal also includes a adjacent 295-unit luxury apartment complex that will be a housing option for Oracle employees. Scott Armour, senior vice president of Oracle Direct, the firm’s cloud sales organization, said, “Our state-of-the-art campus will be designed to inspire, support and attract top talent – with a special focus on the needs of millennials.”

Jobs at the new campus will be primarily sales-oriented, lead qualification, prospecting and technical support. Founded in 1977, Oracle, one of the world’s leading software companies, is based in Redwood City in San Mateo County.

See the full story at: Shonda Novak and Lori Hawkins, Software giant Oracle to build major Austin campus, add employeesAustin American Statesman, Dec. 22, 2015

***

One focus of this blog has been to address California’s hostility toward business, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015 issued on Dec. 31, 2015.

Joseph Vranich is known as the Business Relocation Coach while the formal name of his business is Spectrum Location SolutionsJoe helps companies find great locations in which to grow. He offers an introductory consultation at no cost to help company leaders understand the Site Selection process and to explore whether a project makes sense. See a summary of the process under “The Three Phases of a Location Project” at Why Get Help.

Joe also is a keynote speaker on the benefits of businesses relocating out of high-tax, high-cost, over-regulated states to friendlier business environments. More information is available at Biography and Speaking Availability. On Twitter, Joe is known as@LocationConsultant.

California Companies Head for Greatness – Outside of California

November 10, 2015

Why would companies located in one of the most beautiful states in the country – California – undertake the costly proposition of relocating to places with less scenic appeal and less-than-ideal weather?

Relocation - Blue Hanging Cargo Container.

There are three answers and they relate to California’s business environment: Regulations, taxes and anxiety.

Let’s take anxiety first. Corporate leaders and business owners fear what will happen in the future regarding proposals to raise taxes on business property, extend the Proposition 30 taxes that were supposed to be “temporary,” raise cap-and-trade fees to curb carbon emissions, and impose new workplace regulations regarding family leave and health care. We’re talking about billions of dollars in new operating and ownership costs.

Some of those proposals were defeated this year. But the energy level of the zealotry in California’s legislature means they are certain to rise again in 2016 and 2017. Projecting the resulting cost and complexity in future operations causes leaders in corporations and small businesses to worry – then they worry some more over the unpredictability of it all.

About taxes: This could be discussed for hours, but suffice to say that the Tax Foundation’s 2015 State Business Tax Climate Index lists California at No. 48.

The regulatory environment can be brutal. Examples include fines for trivial errors such as a typo on a paycheck stub – not on the check, just the stub – and putting into law costly overtime provisions that in most states aren’t codified in a statute.

Last year, when Gov. Jerry Brown was asked about business challenges, he revealed his aloofness by saying, “We’ve got a few problems, we have lots of little burdens and regulations and taxes, but smart people figure out how to make it.” The Wall Street Journal responded: “California’s problem is that smart people have figured out they can make it better elsewhere.”

In short, California is so difficult that companies relocate entirely or, if they keep their headquarters here, find other places to expand.

In an effort to offset Sacramento’s head-in-the-sand approach to business concerns, my firm completed a new study that provides details of business disinvestments in the state. Over the seven-year period that includes last year, the study estimates that 9,000 businesses disinvested in California in favor of other locations.

The study shows that 1,510 California disinvestment events have become public knowledge and provides details on each and every event. Site selection experts I’ve been in touch with conservatively estimate that a minimum of five events fail to become known for every one that does. One reason is that when companies with fewer than 100 employees relocate it almost never becomes public knowledge. Hence, it is reasonable to conclude that about 9,000 California disinvestment events have occurred in the last seven years.

Los Angeles County #1 in Losses

The study found that the Top Fifteen California counties with the highest number of disinvestment events put Los Angeles with the most losses at No. 1, followed by (2) Orange, (3) Santa Clara, (4) San Francisco, (5) San Diego, (6) Alameda, (7) San Mateo, (8) Ventura, (9) Sacramento, (10) Riverside, (11) San Bernardino, (12) Contra Costa tied with Santa Barbara, (13) San Joaquin, (14) Stanislaus and (15) Sonoma.

The report excluded instances of companies opening new out-of-state facilities to tap a growing market, acts unrelated to California’s business environment. It also points to shortcomings in Federal and state reporting systems that result in underreporting of business migrations. Those factors reduced the number of California losses.

It is easy to verify circumstances described in the report since every disinvestment event is public information, is outlined in detail and sources are identified in endnotes.

When a company launches a site search, it always wants to examine potential costs. I’ve seen many business people smile upon learning that operating cost savings are between 20 and 35 percent in other states. By the way, the appeal isn’t necessarily to the lowest-cost states, but to lower-cost states with the proper workforce.

Winning Locations

The Top Ten States to which businesses migrated puts Texas in the No. 1 spot, followed by (2) Nevada, (3) Arizona, (4) Colorado, (5) Washington, (6) Oregon, (7) North Carolina, (8) Florida, (9) Georgia and (10) Virginia. Texas was the top destination for California companies each year during the study period.

Metropolitan Statistical Areas (MSAs) benefiting from California disinvestment events, in the order starting with those that gained the most, are: (1) Austin-Round Rock-San Marcos, (2) Dallas-Fort Worth-Arlington, (3) Phoenix-Mesa-Scottsdale, (4) Reno-Sparks, (5) Las Vegas-Paradise, (6) Portland-Vancouver (WA)-Hillsboro, (7) Denver-Aurora-Lakewood, (8) Seattle-Tacoma-Bellevue, (9) Atlanta-Sandy Springs-Marietta and (10) Salt Lake City tied with San Antonio.

Offshoring still occurs, and the Top Ten Foreign Nations that gained the most put Mexico at No. 1, followed by (2) India, (3) China, (4) Canada, (5) Malaysia, (6) Philippines, (7) Costa Rica, (8) Singapore, (9) Japan and (10) United Kingdom.

Capital diverted to out-of-state locations totaled $68 billion, a small fraction of actual experience because only 16 percent of public source materials provided capital costs for the 1,510 events. Moreover, the top industry to disinvest in California is manufacturing, a capital-intensive sector, and more detailed knowledge of this industry alone would likely increase the capital diversion.

As California companies relocated or expanded facilities elsewhere they transferred more than capital – they also shifted jobs, machinery, taxable income, intellectual capital, training facilities and philanthropic investments.

Indicators are that California’s business climate will worsen, enhancing prospects that more companies will seek places that are friendlier to business interests.

The report is based exclusively on news stories and company reports to the U.S. Department of Labor, the Securities and Exchange Commission and the California Employment Development Dept. Although all entries are based on public information, it’s rare for so much data to be gathered into one report.

Full Study: “Businesses Continue to Leave California – A Seven-Year Review” available as a PDF (378 pages) here.

This post originally appeared at NewGeography.com.

One focus of this blog has been to address California’s hostility toward business. Joe Vranich of Spectrum Location Solutions helps companies find great locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of businesses relocating out of high-tax, high-cost, over-regulated states. More information is available at Biography and Speaking Availability. On Twitter, Joe is known as@LocationConsultant.

© Excerpts from this blog may be used, but only if attribution is given to “Joseph Vranich of Spectrum Location Solutions in Irvine, Calif.” 

Orange County’s Worrisome High Cost of Living, Workforce Trends

October 19, 2015

Orange County Calif. SealIn California, Orange County is having a robust economic recovery despite the state’s business-unfriendly tax and regulatory policies. But with the good economic news comes cost-of-living and workforce quality issues.

The county’s high housing prices among other causes are restricting the number of skilled workers who keep the economy humming. And a “growing and persistent skills gap” is a risk if more educated middle-class workers leave California.

The Orange County Register, in Workforce trends threaten O.C. economy, editorialized:

Orange County homes now cost three times the national average. According to the [Orange County Business Council] study, that fact is “forcing residents to seek employment outside of Orange County, including skilled young adults that permanently move out of state to areas with lower housing prices.”

That trend is confirmed by Joseph Vranich, president of Spectrum Location Solutions in Irvine. The OCBC study “could be, word for word, what is happening in San Francisco and Silicon Valley” as well, he said. “I’ve heard housing prices cited as an obstacle to hiring. People coming to work in Orange County also expect higher salaries to pay for the higher housing costs.”

The study, entitled, 2015/2016 Workforce Indicators Report, finds:

Behind only San Francisco and Santa Clara counties, OC is the third most expensive place to live in CA and remains one of the most expensive places in the nation to buy a home and that Less than 22% of residents can afford to buy a home. These factors have a heavy impact on Millennials.

The county’s high cost of living – 7th nationally, according to the 2014 Cost of Living Index (Council for Community and Economic Research) – encourages young people, including highly-skilled young professionals, to move to less expensive areas and threatens the county’s future economic vitality.

A lack of sufficient workforce housing options can cripple regional economic development by forcing residents to seek employment outside of Orange County, including skilled young adults that permanently move out of state to areas with lower housing prices.

Three industry clusters are likely to face the most significant pressure from a skills gap perspective – Advanced Manufacturing, Health Care and Information Technology.

Advanced Manufacturing includes Medical Devices, Computer and Electronic Products, Aerospace Products, Printing, Fabricated Metal Products and Pharmaceuticals.

Joe Vranich of Spectrum Location Solutions helps companies find great locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of businesses relocating out of high-tax, high-cost, over-regulated states. More information is available at Biography and Speaking Availability. On Twitter, Joe is known as @LocationConsultant

© Excerpts from this blog may be used, but only if attribution is given to “Joseph Vranich of Spectrum Location Solutions in Irvine, Calif.”

California Tax Increase Plans Force Business to Look Elsewhere

August 25, 2015

California is considering imposing the most ruthless set of taxes ever placed on businesses – a tsunami of levies that may trigger the worst raid on private-sector finances ever organized by the state’s politicians. One result will be an increasing number of businesses leaving California for greener domestic or international pastures.

Gov. Jerry Brown and legislators will consider several proposals – including a new tax on previously untaxed services that will force companies to pay more for routine transactions, such as shipping a FedEx package, conducting bank transactions, hiring a contractor or relying on an independent auditor.

Fault map – businesses worry more about California politicians than earthquakes

This “let’s tax everything in sight” measure will be on the backs of enterprises ranging from Fortune 500 corporations down to a one-person entrepreneurial company. Estimated annual cost to businesses: $10 billion.

Then there is the fanatical $6 billion annual escalation in fuel and motor vehicle taxes, sure to hit any operation that owns or leases trucks or automobiles.

Also damaging is the potential elimination of Proposition 13’s tax-limiting protections for companies that own offices, data centers and factories – a “split roll” that would include virtually all non-residential properties. That will be another $9 billion paid annually by commercial enterprises.

Public employee unions are insisting on a multi-year extension of Proposition 30, which pushed income and sales taxes to the highest in the nation. That passed in 2012 after voters were told they were “temporary” taxes. Cost: $6-7 billion annually on businesses and individuals.

And so it goes, even though the state is awash in an unanticipated $6 billion tax surplus above Gov. Brown’s budget, according to the Howard Jarvis Taxpayers Association. Astonishing.

It’s little wonder that companies leave California in full or in part, as reflected in a sampling of moves that have occurred quite recently.

Right now, Sage North America is relocating its headquarters from Irvine to Atlanta, where it will create 400 jobs. A company official said the project happened “very quickly.”

Another firm, iDiscovery Solutions, Inc., will shift its West Coast headquarters from Costa Mesa to Seattle – the latter office having opened only six weeks prior to the relocation announcement.

Los Angeles sees many company departures, the latest being Go West Creative. The marketing agency said it didn’t intend to relocate its headquarters to Nashville when it opened there a few months ago, but that’s precisely what happened.

None of this is surprising because the state’s political establishment routinely ignores concerns expressed by business leaders.

For example, Ehsan Gharatappeh, CEO of CellPoint Corp. of Costa Mesa, when launching a new facility in Fort Worth, said, “Even if California were to eliminate the state income taxes tomorrow, that still would not be enough to put my manufacturing operations back in California.”

Think about Dan Castilleja, president of DHF Technical Products, who said when relocating that it’s easier to expand in New Mexico than in the Los Angeles area where “We are hampered by everything from payroll to taxes to regulation.”

Examples abound of companies leaving for other states – even to the so-called “Rust Belt” – because their friendlier business environments far outshine our disadvantages.

California’s public officials come across as being uncaring about the damage they inflict on businesses, investors, employees and their families, and to the towns that lose jobs to distant locations.

As the California political parade demanding higher taxes becomes longer, look for the list of companies leaving California to become longer, too.

Published yesterday at the Orange County Register and today at Fox and Hounds.

One focus of this blog has been to address California’s ever-growing hostility toward business. California has virtually institutionalized antagonism toward and intimidation of companies of all types. For examples of legislative proposals to increase taxes and and implement even more punishing regulations on businesses, see the California Chamber of Commerce and the California Manufacturers & Technology Association.

Joe Vranich of  Spectrum Location Solutions helps companies find great locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of businesses relocating out of high-tax, high-cost, over-regulated states. More information is available at Biography and Speaking Availability

© Excerpts from this blog may be used, but only if attribution is given to “Joseph Vranich of Spectrum Location Solutions in Irvine, Calif.” 

Cost of Doing Business Report Again Shows California as Most Expensive

June 30, 2015

“California continues to have the highest business tax climate on the West Coast. This reality compels businesses to reconsider their relationship with the State and look elsewhere for a lower-cost solution.” – Larry Kosmont

For ten years now I’ve been posting opinion and news pieces on the Internet, but today marks the first time that I’m republishing someone’s news release. I’m doing so because of the excellent findings in a well-respected Cost of Doing Business Survey. For an abridged version of the announcement, read on . . .

Claremont, Calif., June 29, 2015 – Claremont McKenna College’s Rose Institute of State & Local Government today released the 20th annual Kosmont-Rose Institute Cost of Doing Business Survey. The Rose Institute gathers business fees and a variety of tax rates from 305 selected cities, focusing on the states where business relocation is the most active.

The 2014 edition encompasses the most recent calendar year and takes a close look at business costs in California along with eight other western states that many companies view as possible alternatives to California (Arizona, Colorado, Nevada, New Mexico, Oregon, Texas, Utah and Washington).

Rankings for each city are divided into one of five “Cost Ratings” groups: Very Low Cost ($), Low Cost ($$), Average Cost ($$$), High Cost ($$$$), and Very High Cost ($$$$$).

Highlights: Most Expensive Cities

Of the 20 most expensive cities surveyed, 12 are located in California; 9 are in Southern California and 3 are in the San Francisco Bay Area. Los Angeles and the San Francisco Bay Area are the two most expensive metropolitan areas in the western United States.

Seven out of the twenty most expensive western cities surveyed are in Los Angeles County: Those cities are Bell, Beverly Hills, Culver City, El Segundo, Inglewood, Los Angeles, and Santa Monica.

Highlights: Least Expensive Cities

Texas stands out as a low-cost state, with six cities on the list of twenty least expensive western cities surveyed. Both of the least expensive cities in California, Moorpark and Mission Viejo, are located in Southern California.

California Cities Continue to Rank as High Cost – No Relief in Sight

“California continues to have the highest business tax climate on the West Coast. This reality compels businesses to reconsider their relationship with the State and look elsewhere for a lower-cost solution,” according to Larry Kosmont, President of Kosmont Companies and founding publisher of the Kosmont-Rose Institute Cost of Doing Business Survey.

Kosmont maintains that firms still want to locate in California, citing the Golden State’s world-class weather (although recently dry), amenities, large and diverse workforce, and strategic Pacific Rim location. “Mid-to-large corporations have a love-hate relationship with California. They may want to be in California, but in their attempt to control costs and remain competitive, many CEO’s are motivated to ask, ‘How small an operation in California can I manage and still service that market?’ As a result, the sales, design office, or distribution unit may stay or even expand in places in or nearby Los Angeles, San Diego or the Bay Area, but other operating units are more likely to end up in states like Nevada, Arizona or Texas,” says Kosmont.

[From experience, I can say that Mr. Kosmont’s views are quite accurate. – J.V.]

Fueling an environment unfriendly to business, numerous city elections during the past few years have resulted in increased taxes at the local level. In 2014, an astounding 65 local sales tax measures were decided, and of this total, 50 were approved by voters.

Almost every year, the California Legislature considers whether the Property Tax on businesses should be increased. Called the split roll, if adopted, it would require businesses to pay property taxes at a rate higher than the homeowners’ rate versus the present system where property taxes are taxed based on the same formula, whether a residence, apartment building, or property used for commercial or industrial purposes.

The twenty most expensive cities in the West in 2014 are (in alphabetical order):

Bell, Calif.
Bellingham, Wash.
Berkeley, Calif.
Beverly Hills, Calif.
Chandler, Ariz.
Culver City, Calif.
Denver, Colo.
El Segundo, Calif.
Glendale, Calif.
Inglewood, Calif.
Los Angeles, Calif.
Oakland, Calif.
Phoenix, Ariz.
Portland, Ore.
San Bernardino, Calif.
San Francisco, Calif.
Santa Monica, Calif.
Seattle, Wash.
Tacoma, Wash.
Tucson, Ariz.

The twenty least expensive cities in the West in 2014 are (in alphabetical order):

Abilene, Texas
Corpus Christi, Texas
Dallas, Texas
Eugene, Ore.
Everett, Wash.
Federal Way, Wash.
Fort Worth, Texas
Gresham, Ore.
Henderson, Nev.
Houston, Texas
Kent, Wash.
Las Vegas, Nev.
Mission Viejo, Calif.
Moorpark, Calif.
Ogden, Utah
Plano, Texas
Reno, Nev.
Sparks, Nev.
Spokane, Wash.
Yakima, Wash.

The complete news release can be found at PRWEB.

Some background information about the survey is here.

The Rose Institute’s interesting history is here.

To purchase the 2014 survey, click on the Institute’s logo, below:

The Rose Institute of State and Local Government

Congratulations to all who worked on this excellent survey.

Joe Vranich of Spectrum Location Solutions helps companies find great locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of businesses relocating out of high-cost, high-tax, over-regulated states. More information is available at Biography and Speaking Availability